Thursday, November 12, 2009

Motor insurance is compulsory

It is compulsory by law for the owner of a vehicle to have a motor insurance cover. The mandatory cover is for third party injury. In theory, you do not need to buy insurance to cover property damage, if you do not wish to.

It is difficult to find an insurance company that will offer only compulsory Act cover. A more frequent coverage is third party cover (which covers liability to third parties for injury and property damage). The premium is about 50% to 65% of the comprehensive cover. Comprehensive cover, which is more common, will also cover damage to your own vehicle.

During the past two years, the premium for motor insurance has increased by about 30% due to more accidents and fraudulent claims. Some customers have to pay more. The insurance companies introduced the "Motor Claim Framework" to combat the escalation in claims. So far, it has failed to achieve the desired outcome.


Anonymous said...

mr Tan, why do you think the MCF has failed to achieve the desired outcome? .. to me the MCF doesnt seem to tackle to core root issue.. ie of escalation of claims amounts and insurer just pass on the extra cost to policyholders..


Anonymous said...

The motor insurance companies seem to be taking the easy way out by taxing on the good policy holders who seldom or never claim, to cover the bad drivers claims.

It is an unfair practice in my opinion. The guilty party is to shoulder the blame and costs, not the bystanders.

Since motor insurance is complusory here, why can't the companies just load on the premiums on those bad drivers, it should be as simple as a few clicks of the mouse on the computer.

Could it be possible that all these motor insurance companies be profiteering from the situation?

Heard some 'taxi talk' / rumour that a certain LAGRGE taxi company here; when any of their taxis get involved in an accident (not caused by the taxi driver), the damaged are highly inflated (adding lost of income, repair, lost time etc etc).

Vincent Sear said...

Yes, by law, third party insurance is only required for personal injury. However, in practice, most insurance companies offer minimum coverage including personal injury and property damage. The reason is of course business and economic scale. Too small premium, might as well don't do the business. Too high premium, offer extra coverage.

Anonymous said...

Those in the business world would know how corporations weasel their way out of paying huge bills. Have heard of a local property developer that's famous for NOT paying their contractors.

I would imagine that some of the people here would weasel themselves out with excuses the moment they drive into a ferrari.

If you have serious issues paying a few hundred per year for motor insurance, you will no doubt refuse to pay for a 6 or 7 digit loss that another has suffered.

True case:
Woman ran over an ang moh at Scotts Road. Court/judge acknowledges that the deceased suddenly dashed onto the road, yet orders woman to pay SGD $2 mil. Insurer lan lan have to pay. If there's no insurer, driver will not pay! There's no need to ask why.

Vincent Sear said...

To: Anonymous 9:42PM

Yes sir, you've said it all. When self or loved one got knocked down by someone who can't afford to compensate, then we know the taste. It's very easy and even cheap to say we buy personal accident policies ourselves. But how many really do buy? And in terms of responsibility, the driver of the motor vehicle is responsible for safe operation of the vehicle, not pedestrians.

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